When a person is confronted with a situation (hereinafter “situation” or “problem”) for which there are numerous ways to proceed (hereinafter “action options” or “options”) toward a resolution (hereinafter “solution” or “outcome”), the person must engage in a decision making process to determine how to best proceed. The decision making process is common to all persons confronted with a situation, even though the problems, the action options and the solutions for each person may differ dramatically.
In general, the decision making process is influenced by a number of factors including, but not limited to, the cost of analysis versus the marginal benefit between choosing different action options, timing considerations and the level of expertise of the person engaging in the decision making process. The first two considerations—expense and timing—have a generally logistical and measurable impact and can, therefore, be analytically factored into the decision making process. However, the third consideration—known as the “knowledge dilemma”—tends to plague the decision making process, particularly as the complexity and numerosity of situations or problems, action options and solutions increases.
Regarding the cost-benefit-analysis, the person needs to balance the cost of analysis and decision making versus the marginal benefit of making an improved decision. When the cost of analysis is low relative to the benefit of making an improved decision, the person might commit significant resources (i.e., both in terms of value and time) to making the optimal decision. Similarly, when the cost of pursuing each option (i.e., experimentation) and/or the marginal benefit between various action options is large, the person might also commit more resources to the decision making process. By comparison, where the cost of analysis is high, the person may opt to commit more non-monetary reserves to the decision making process, or, alternatively, have a different “optimal” or at least acceptable solution. For example, a trust manager overseeing a multi-million dollar trust is likely to purchase expensive computer programs, such as predictive modeling software, and subscriptions to proprietary information in order to make a fully informed decision using all available data. In contrast, an individual with debt problems who is reviewing what to do with a $1,000 tax return can only invest a limited amount of money, time and other resources in determining what to do before the cost of analysis surpasses the difference in outcome produced by each action options. In a worst-case scenario, the individual could even commit more value in money, personal time and other resources to the decision making process than the available resources (i.e., $1,000) are worth.
The cost of analysis and the marginal benefit of making an improved decision are both sensitive to budget constraints. By way of example, if the individual reviewing what to do with the $1,000 tax return is carrying $5,000 of outstanding debt, then the optimal allocation of the $1,000 between any number of credit cards, mortgage payments and the like may have a sizeable impact on the outcome, at least on a percentage basis.
Regarding the timing considerations, timing, like any other resource, forms the basis of its own cost-benefit-analysis. Although a more thorough review of various action options may result in the selection of an improved course of action to pursue, the delay inherent in the review process can negatively impact the outcome. In addition, timing can impact the availability of action options and the likely outcome. For example, the trust manager is likely to conduct a continuous analysis of the market in order to prepare a long-term strategy that addresses crises and opportunities, alike, over a period of time. The trust manager will also monitor the market in order to respond promptly according to the long-term strategy and in view of any crisis or opportunity that arises. In contrast, the individual who is suffering from debt problems is more likely to focus on billing cycles and foreclosure deadlines in order to avoid incurring monetary penalties, negative credit ratings and loss of property for failure to meet a deadline.
Regarding the level of expertise for the decision maker, the person's level of sophistication, knowledge and experience impacts his ability to make an informed decision and, thereby, arrive at a selection of an improved action option. If the person is very knowledgeable, the person may either know how to best proceed, may be able to narrow the available options up front, or, at least, apprehend the deficiencies of his decision making process and consult another expert to arrive at an optimal decision. In contrast, if the person is not knowledgeable, he may have little idea of what options are available, in general, what information should guide the decision making process and who to contact for assistance or, even, the rendering of services once a final decision is made. For example, the trust manager is likely to have years of personal experience and immediate access to numerous specialists. With this combination of expertise, the trust manager has an improved chance to arrive at an optimal or near-optimal decision and have confidence in proceeding along the proper course of action. However, the individual with debt problems is likely to be less sophisticated. As a result, the individual is unlikely to know all of the options that are available, whether or not his is even eligible for the options, what outcome to expect, who to contact for additional information and so on.
From the above, it appears that someone like the trust manager is in an advantageous position to make improved decisions, and that someone like the individual with debt problems is in a disadvantageous position. However, the resources (i.e., money, time and expertise) committed by the trust manager are often prohibitive and, therefore, limit the applicability of such an approach in many decision making processes performed in response to a range of situations. Moreover, the pre-existing knowledge and expertise of the trust manager may steer the decision-making process without fully considering all options relative to all pertinent factors. Accordingly, there is need for a decision making approach that can evaluate a plurality of action options in view of numerous influencing factors associated with the situation of the user and determine the best option under all circumstances without unnecessarily increasing the cost, time and prerequisite level of expertise.
The object of the present invention is, therefore, to provide a method for decision making, which, among other desirable attributes, significantly reduces or overcomes the above-mentioned deficiencies of methods for decision making.